A study by the Business Development Bank of Canada (BDC) found 39 percent of Canadian small and medium-sized enterprises (SMEs) face challenges finding new employees.
The labour shortage, which is most acute in Atlantic Canada, British Columbia and Ontario, and in the manufacturing, retail trade and construction sectors, is not expected to improve for at least a decade.
The study, based on a survey of 1,208 entrepreneurs, also found SMEs affected by labour shortages are 65 percent more likely to generate low sales.
Among the strategies used to locate talent, SMEs were least likely to consider hiring immigrants.
Canadian businesses struggling with labour shortages: new BDC study
Immigrants often overlooked as potential talent pool
• 39% of Canadian small and mid-sized businesses (SMEs) are already having difficulty finding new employees and the problem will not improve for at least a decade
• There is a direct link between labour shortages and slow sales growth: the most affected firms are 65% more likely to generate low sales
• The problem is most acute in Atlantic Canada, British Columbia and Ontario
• The hardest hit industries are manufacturing, retail trade and construction
September 5, 2018, Montréal—As Canada’s population ages, over 39% of SMEs are struggling to find new employees and the problem will not improve for at least a decade, according to a new study released today from the Business Development Bank of Canada (BDC).
“Labour shortages are affecting growth for many Canadian businesses, and this has an impact on Canada’s competitiveness,” says Pierre Cléroux, Vice President, Research and Chief Economist at BDC. “Businesses are being forced to refuse orders or delay deliveries. To help deal with the impact, entrepreneurs should think about hiring from underemployed segments of the population, such as immigrants and newcomers to Canada.”
The study, based on a survey of 1,208 entrepreneurs, found a direct link between labour shortages and slow sales growth. Firms affected by labour shortages are 65% more likely to generate low sales.
The situation is most dire in Atlantic Canada, British Columbia and Ontario with manufacturing, retail trade and construction the hardest hit sectors. Nearly six in 10 entrepreneurs said the labour shortages mean existing staff must work more, while 47% said they have had to raise wages.
Business owners missing out on an important pool of talent
According to the study, entrepreneurs are missing an opportunity by not turning to under-represented segments of the labour force to fill their hiring needs. Among the strategies used to find workers, entrepreneurs were least likely to consider hiring immigrants or newcomers to Canada.
According to Statistics Canada data, immigrants will account for about two-thirds of Canada’s population growth in 2022 and up to 80% by 2032. Yet, only 18% of Canadian entrepreneurs report looking to immigrant workers to fill their needs for skilled employees. Businesses should consider hiring new immigrants to fill positions or risk stagnated growth.
The study also describes a list of other strategies that can mitigate the impact of labour shortages on business, which include the following:
• Developing an employee value proposition to make the business more attractive to existing and new employees. Marketing the business to employees the same way products and services are marketed to clients can help retain top performers and attract new talent.
• Formalizing HR policies to put the business on a more solid footing. Strong HR policies facilitate hiring, improve retention and reduce legal and reputational risks, among other benefits. Our research shows that firms with strong HR policies also outperform their peers.
• Improving operational efficiency, automating processes and leveraging technologies
BDC is the only bank devoted exclusively to entrepreneurs. It promotes Canadian entrepreneurship with a focus on small and medium-sized businesses. With its 123 business centers from coast to coast, BDC provides businesses in all industries with financing and advisory services. Its investment arm, BDC Capital, offers equity, venture capital and flexible growth and transition capital solutions. BDC is also the first financial institution in Canada to receive B Corp certification. To find out more, visit bdc.ca.
Media Relations, BDC